May 24, 2017
Furukawa Co., Ltd.
(Securities Code: 5715; TSE First Section)

Medium-Term Business Plan 2019: Building Foundations forRenewed Growth
The Furukawa Group has formulated a new medium-term business plan, entitled“Medium-Term Business Plan 2019,” covering the three-year period from April 2017
through March 2020. The slogan of this plan is “Building Foundations for RenewedGrowth.”
1. Positioning
The new plan represents Phase 1 of the Group’s Vision for 2025, called“FURUKAWA Power & Passion 150,” and is positioned as a period for “BuildingFoundations for Renewed Growth.”

2. Performance Indicators (Consolidated)
Fiscal 2020, ending March 31, 2020, will be the final year of Medium-Term Business
Plan 2019, aimed at realizing the Group’s Vision for 2025, “FURUKAWA Power &Passion 150.” The Group has set the following performance indicators as milestones.

Operating income
ROE

FY2017 results¥6.5 billion
5.9%

FY2020 milestones¥8.5 billion range
6–7% range

Underlying assumptions
FY2017 results
Exchange rate (¥/USD)
Exchange rate (¥/EUR)
LME copper price (USD/t)

FY2020 assumptions
108.4
118.8
5,154

11101156,000

3. Business Policies(1) Groupwide strategy
Under Medium-Term Business Plan 2019, the Group will broadly implement“Marketing-based management”*1 with the aim of improving the value of theFurukawa brand.
Meanwhile, we will work to continuously expand the Machinery business,earmarked as our core business. We will also work to strengthen and expand ourhuman resource foundation, actively promote investments to increase corporate value,and establish a robust corporate foundation.
(2) Fundamental strategies by segment(a) Machinery BusinessOver the period of Medium-Term Business Plan 2019, we anticipate a steady shifttoward domestic demand associated with the Linear Chuo Shinkansen Line, newShinkansen lines, the Building National Resilience Plan, regional rejuvenation
initiatives, the 2020 Summer Olympics and Paralympics in Tokyo, and other projects.
In addition to steadily addressing such demand, we will build a foundation forrenewed growth based on the fundamental strategies of each business segment.
[Industrial Machinery]
We will increase our involvement in section plant*2 construction projects and largescale projects and otherwise expand our contractor businesses*3 with the aim oftransitioning from a standalone machinery manufacturer. To achieve this, we will
strengthen our engineering capabilities*4 and enhance our business foundation in thedomestic market.
[Rock Drill Machinery]
By strengthening our life cycle support (LCS)*5 capabilities, we will increase income
from both our flow business and stock business*6 and reinforce the income foundationfor our drill product lineup (blast hole drills*7 and drill jumbos). To achieve this, wewill upgrade our domestic service support system and establish overseas sales
channels.
[UNIC Machinery]
Seeking to ensure stable income from domestic sales and expand income from ourstock business and overseas sales, we will distinguish our UNIC crane lineup bypromoting advanced functions and higher added value, in order to strengthen ourcompetitiveness. At the same time, we will promote our second-hand business,reestablish our overseas sales network, and enhance our sales capabilities.
(b) Materials Business[Metals]
We will work to establish an optimal production and sales system with an emphasis
on profitability, in order to improve our earnings foundation.
[Electronic Materials]
We will shift our focus from mature products to strategic products in an effort to2

restore Electronic Materials as a strong business segment.
[Chemicals]
We will work to expand income from existing products and swiftly commercialize
and foster newly developed products with the aims of transforming existing
businesses and securing steady income from new businesses.
(c) Real Estate
We will strive to secure stable income from the Muromachi Furukawa Mitsui
Building[ (commercial name: COREDO Muromachi 2)] and effectively utilize
income from other properties owned by the Group with the aim of reinforcing ourincome foundation.
(3) Product development system
We will improve the efficiency and speed of product development based on flexible
concepts that transcend the fields of machinery and materials. Meanwhile, seeking toenergize development of new products, our various business divisions andDevelopment Division will unite to promote product development.
In the Machinery business, earmarked as a core business, we will deploy visual andauditory sensing technologies, as well as artificial intelligence (AI) andcommunication network technologies, for the practical application of machinery
products that can work autonomously, such as automated equipment and robots.
(4) Strengthen and expand our human resource foundation
We will step up personnel development efforts while promoting workstyle reforms
and diversity in order to strengthen and expand our human resource foundation.
(5) Actively promote investments to increase corporate value(a) Capital investment plan to support stronger manufacturing capabilities
Over the period of Medium-Term Business Plan 2019, we plan to make cumulative
capital investments of around ¥16 billion, which will be allocated mainly to our core
Machinery business.
(b) M&As and alliances
We will consider mergers and acquisitions (M&As) and alliances with peripheralbusiness companies that can complement and create continuity with our existing
Machinery business. We will also look at companies that can help us create acompletely different segment to serve as the fourth pillar of the Machinery business.
(6) Establish a robust corporate foundation(a) Strengthen and entrench efforts to increase ROE
We will step up and entrench efforts to improve efficiency and profitability, targeting
ROE of 6–7% range by fiscal 2020.
(b) Allocation of operating cash flows
We will actively promote investments to increase corporate value while establishing asolid financial base. At the same time, we will allocate operating cash flows with due
consideration to shareholder return.

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In the three-year period from fiscal 2018 through fiscal 2020, we forecast
cumulative consolidated net cash provided by operating activities of approximately¥25 billion, which will be allocated as follows.
Net cash provided by operating activities (3-year cumulative)
Allocation scenario
Interest-bearing debt*8 reduction
Capital investmentDividends¥25 billion¥3 billion¥16 billion¥6 billion(c) Capital strategies[Dividends]
Our policy is to return profits to shareholders in the form of dividends appropriatedfrom retained earnings. Specific dividend amounts are based on consolidated
profits/losses. With the exception of special profit/loss circumstances, we endeavor inprinciple to pay annual cash dividends of ¥5.00 per share with a consolidated payout
ratio of 30% or higher. In this way, we strive for stable, continuous shareholder
returns.
[Treasury stock purchase and cancellation]
With respect to purchase and cancellation of treasury stock, our policy is to properly
consider all relevant factors, including share price movements, capital efficiency, andcash flows.
(7) System to implement Medium-Term Business Plan 2019
In order to implement Medium-Term Business Plan 2019, we will establish businessexecution and responsibility frameworks and set up a new Business Process Reengineering Department. Our aim is to standardize and enhance administrative
efficiency, increase productivity, and reconstruct our business processes.
In addition, we will establish dedicated teams to spearhead overseas strategies forour core Machinery business, as well as our stock business and M&As opportunities.
Notes*1 Marketing-based management“Marketing-based management” means incorporating marketing into the core ofmanagement to provide products and services recognized as valuable in changing
markets, as well as to identify and resolve issues and problems faced by customers,
with the aim of deepening ties with customers, achieving sustained growth, andincreasing corporate value.
*2 Section plantPart of the processing stage of the overall plant.
*3 Contractor businesses
Civil engineering and construction-related businesses that handle construction,
operational management, and the like, by contract agreements and other contracts.
*4 Engineering capabilities
The ability to deploy experiences, technologies, and knowledge derived from sales

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activities as tools to deliver optimal proposals to customers which are considered atotal balance of factors, including function, cost, usage environment, and safety.
*5 Life cycle support (LCS)
Support to provide optimal management services aimed at minimizing machinery
holding and operating costs as much as possible across the total life cycle ofmachinery (selection and delivery, operation and maintenance, large-scale repair andregeneration, disposal and replacement).
*6 Stock businessBusiness targeting the after-sales market (including sales of maintenance parts,provision of maintenance services, trade-in and sales of used products) and the rental
market, as opposed to the “flow business” (product sales), which is easily impacted byeconomic factors. We will continuously expand and reinforce our stock business,earmarked as one of “ Foundations for Renewed Growth,” because it generates
relatively stable income.
*7 Blast hole drill
A machine that drills holes for blasting purposes and is used for relatively large-scale
blasting associated with mines, crushed stones, civil engineering work, and the like.
Used within the Group, it is a generic term that covers crawler drills, down-the-hole
drills, and rotary drills used on the surface.
*8 Interest-bearing debt
Refers only to borrowings and does not include lease obligations.

[Reference]
Performance by segment
Sales
Machinery Business(Industrial Machinery)(Rock Drill Machinery)(UNIC Machinery)
Materials Business(Metals)(Electronic Materials)(Chemicals)
Real Estate
OthersTotalFY2017 results
66,803(14,041)(26,979)(25,782)
78,968(67,853)(5,816)(5,298)
3,074
983
149,829

5(¥ millions, rounded down)
FY2020 scenario
Difference
84,100+17,297(20,000)(+5,959)(33,500)(+6,521)(30,600)(+4,818)
79,600+632(67,200)(–653)(6,400)(+584)(6,000)(+702)
2,500
–574
1,400
+417
167,600+17,771

Operating income
FY2017 results
Machinery Business(Industrial Machinery)(Rock Drill Machinery)(UNIC Machinery)
Materials Business(Metals)(Electronic Materials)(Chemicals)
Real EstateOthers
Subtotal

Adjustments
Total(¥ millions, rounded down)
FY2020 scenario
Difference

3,580
(104)
(897)
(2,578)1,870(1,738)
(17)
(114)
1,265
–126
6,590
–44
6,545

6,250
(1,250)(1,600)(3,400)
1,400
(700)
(300)
(400)
1,000
–40
8,610
–110
8,500

+2,670(+1,146)(+703)(+822)–470(–1,038)(+283)(+286)–265+86+2,020–66+1,955

Underlying assumptions
FY2017 results
Exchange rate (¥/USD)
Exchange rate (¥/EUR)
LME copper price (USD/t)

FY2020 assumptions
108.4
118.8
5,154

61101156,000

Cautionary Notes Regarding Forward-Looking Statements
Statements about future predictions contained in this document are based on various
factors—including forecasts, expectations, assumptions, plans, acknowledgments, andevaluations—that derive from information currently at hand. Actual businessconditions and activities involve various latent risks and uncertainties and can beaffected by them. Accordingly, forward-looking statements and suggestions based
thereon may differ significantly from actual outcomes.
Latent risks and uncertainties than can potentially affect future forecasts are describedin the Company’s Annual Report and in the Business Risks section of theCompany’s corporate website. However, such risks and uncertainties are not limited
to those described therein.
Consequently, the Company cannot promise or guarantee the achievement of key
performance indicators[ (KPIs)] or forecasts, nor of future results, as described in thisdocument.
Irrespective of actual results, moreover, the Company is not obligated to update thecontent of this document after its release date, and does not have a policy to do so.
The purpose of preparing this document is to help shareholders, other investors, andthe like obtain a better understanding of the Company’s management policies andinformation, not to solicit any equity investments, including the purchase or sale of
the Company’s shares.
Investors are asked to take responsibility for final investment decisions in light of theaforementioned points.
Please take responsibility when using this document. The Company bears noresponsibility for erroneous or defective information contained in this document, norof changes in [key performance indicators/KPIs] or forecasts, nor of any other lossescaused as a result of using this document.

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